The C-130H models are the first of four surplus Hercules planes to be given to the Indonesian Air Force in ready-to-fly condition, Defence Minister Stephen Smith said in Darwin.

The H-models are being phased out by Australia, but are still in service with the US Coast Guard for long-range maritime patrol and search and rescue.

The RAAF has refurbished its heavy transport fleet with the purchase of six giant C-17s and the latest C-130J model Hercules.

"We're in a position to decommission some of our C-130Hs and as part of that process, we are gifting four to Indonesia," Mr Smith, adding the donation was "very important" to help improve Indonesia's air logistics capability.

Australia's recent assistance to Indonesia in the fight against people-smuggling also includes cash to build 12 new police stations in coastal provinces and two small inshore patrol boats for use by Indonesia's marine police.

Julia Gillard and Indonesian President Susilo Bambang Yudhoyono meet in Darwin today as part of an agreement to boost cooperation between the two countries.

Other bilateral talks will be held between Mr Smith and his Indonesian counterpart Purnomo Yusgiantoro in which the vexed issue of combating asylum seekers will be raised.

"This is a project we've been working on for a couple of years now involving Australia, the United States and Indonesia," Mr Smith said.

"We of course received the C-130s from the United States and United States' approval is required for on-gifting."